Indian government's plan to allow in western supermarkets triggers fury

A shopkeeper in New Delhi. Indian politicians say a move to allow foreign supermarkets a majority share of local companies would harm small traders. Photograph: Gurinder Osan/AP

A fierce row has broken out following the Indian government's decision to open India up to western supermarkets, blocking parliament for days and bringing promises from senior politicians to raze any such stores that are built.

Groups representing small traders are planning demonstrations across the country in coming days to protest against the move announced by the prime minister Manmohan Singh's government last week.

Major global companies such as Tesco, Carrefour and Wal-Mart have been trying to get access to the Indian market for many years, attracted by breakneck economic growth and the new tastes of the expanding middle classes.

Under new regulations such companies would be allowed to take a majority share of local firms. Single brand retailers such as Ikea could build their own stores independently.

But opposition parties have seen the issue as an opportunity to further weaken the Congress-party-led administration.

Both houses of parliament have been adjourned amid noisy protests.

Arun Jaitley, a leader of the opposition Bharatiya Janata party, said India was against allowing foreign supermarkets in.

M Karunanidhi, the leader of the government-allied DMK party, said the move was dangerous as it would affect tens of thousands of "small traders as well as the poor and middle-class consumers. It will also be a cause for economic decline for our country."

In the vast northern state of Uttar Pradesh, politicians competed to voice their opposition, pledging to physically attack any such shops.

Swapan Dasgupta, a political analyst and commentator, said the fierce reaction was owing to parties fighting over the votes of small retailers.

"They [small retailers] are a huge constituency and traditionally on the right. They have real fears that they will suffer even if India is in fact big enough to accommodate supermarkets and small traders alike," Dasgupta told the Guardian.

The current government is led by the centre-left Congress party and is now in its second term. It has been criticised for losing the momentum of reforms which many analysts believe boosted India's growth to near 10% in recent years. The past 18 months have been tough on ordinary Indians and business, however, with a falling rupee, runaway inflation and rising interest rates undermining confidence.

Supporters say the move to allow in western supermarkets will bring down prices, aid the creation of a functioning distribution system and boost growth. There are restrictions which will allow the foreign companies access only to major cities.

Many customers say they would be happy to see any measure that brings down the price of basics such as flour, tomatoes and onions.